Warehousing

Warehousing is one of the six aids to trade. The goods and services produced during the production process need to be distributed, so that they can be transferred from the point of production to the innumerable consumers. Now, the process of distribution involves, the producers, the wholesalers, the retailers and of course the ultimate consumers. In the process of distribution, there is a need for the goods to be stored from time to time and from place to place during the process of the transfer of the goods from one person to another.
Essentially warehousing is the process of storage of goods for keeping them safe until the time that they are required. The wholesaler usually provides facilities of this type, as they are willing to break bulk and sell the goods to the retailer. The wholesalers originally buy these goods from the manufacturers.

Type of Warehouses

The most common forms of warehouses have been listed below along with appropriate explanations.

A Producer’s Warehouse

Manufacturers or producers, whatever you may call them are the ones who produce all the goods. They arrange for their own warehouses. They want to keep the goods produced safe and ready in their warehouses, until they have to sell them horizontally, to the wholesalers or retailers etc depending on the chain of distribution used. These warehouses arrange by these producers are sometimes owned by them or at other times have just been rented for a particular time. Such an arrangement is worth the money spent because the goods are safe from theft, depletion and other related risks. They are readily available for sale when required. Moreover, the wholesalers do not buy all the goods, as some are returned and some are not even bought the first time around, so warehouses provide a suitable place of storage. Thus warehousing removes the hindrance of time and place. The goods are graded, packaged and branded in the warehouses.

The Wholesale Warehouse

Wholesalers buy goods in huge quantities from the producers and then sell them to the retailers in relatively small quantities. The process of distribution involves the breaking of bulk and the wholesalers play a vital role. Wholesalers arrange for warehouses as well.

As mentioned above, they buy huge quantities of the goods from the producers thus they need a means of storing the goods until required by the retailers. So, they keep those goods in warehouses and keep them there until the time comes for them to sell them to the retailers. The wholesalers store a variety of goods as they are in contact with a number of producers. The warehouses may be owned by these wholesalers or just rented by them. All of the goods are not sold thus; the warehouses are required for such events as well.

Depots

They are also known as the retailer’s warehouse. Retailers are the intermediaries. Consumers like us buy goods and services form such retailers. They need storage facilities to keep excess stock until the consumers require it. So, the retailers arrange for depots to keep their excess stock in a safe manner. Supermarkets usually make such arrangements, because they have a large turnover and they can afford to keep excess stocks, as their consumer base is voluminous.

Cold Storage

All the goods kept by the are not durable. Commodities such as food items are perishable and thus cannot be stored in ordinary warehouses. They require great care and need to be kept under appropriate conditions and temperature. Cold storage warehouses have refrigeration facilities. They can store perishable items such as vegetables, fruits and other food items. Cold storage facilities aid home trade as well as foreign trade. Pakistan exports a considerable amount of fruit, vegetables and other food items and makes use of such a facility.

Cash and Carry Warehouse

These warehouses provide the opportunity for retailers to buy goods in bulk at low prices. Wholesalers or the producers make such an arrangement. The retailers have to come themselves to buy goods form these warehouses. The process is based upon the self-service procedure. Retailers have to arrange for their own transport. The producers do not have to bear the transport costs or the service costs thus they are able to provide goods at low rates than normal.

Public Warehouses

Goods that have been cleared by the Customs can be stored in these warehouses for a fixed charge. They are called Public warehouses, as they are not owned by any particular individual but by the state. They are especially for the use of the exporters and the importers.

Bonded Warehouses

These are under the control of the Customs and Excise Authorities. The government or private individuals can own them. Dutiable goods are stored in these warehouses and cannot be removed until the duty has been paid on them. For importers, who want to re-export these goods, the goods cannot be removed until the time comes for them to be re-exported.

Why do we need Warehousing?

Warehousing facilitates trade and commerce.
Warehousing removes the hindrance of time and place.
Warehousing enables the producers to carry out the process of production in a continuous manner.
Warehousing helps the retailers and the wholesalers and keeps the process of distribution free from obstacles.
It helps to keep the goods, safe and ready when required.
Grading, packaging and branding of goods is also carried out in warehouses.
Bonded Warehouses and Public warehouses facilitate foreign trade.
Warehousing helps to keep the prices stable.

In the diagram below, it can be seen that throughout the distribution process,
The producers, the wholesalers and the retailers make use of Warehousing.